Infrastructure drive helps growth rate reach new high - but at a price

PUBLISHED : Tuesday, 17 June, 2008, 12:00am
UPDATED : Tuesday, 17 June, 2008, 12:00am

Xinjiang's economy grew more than 12 per cent last year, the fastest rate in the past five years, helped by investment in infrastructure and property.

Per capita gross domestic product reached US$2,217, breaking through the US$2,000 mark for the first time. They are numbers that Beijing hopes will lift living standards and quell potential unrest among the region's many ethnic groups.

Xinjiang has benefited from a government drive to develop lagging western regions by building infrastructure. The region's investment in fixed assets, a key measure of state spending, rose more than 18 per cent to 185 billion yuan (HK$209 billion). Investment in property, which has been a target of speculation, surged more than 40 per cent to about 17 billion yuan.

Disposable income for urban residents rose 11.2 per cent to 10,313 yuan per person, while that of rural residents rose 10.1 per cent to 3,183 yuan. Xinjiang's biggest challenge is geography. The region is arid, surrounded by mountains and far from the markets of eastern China. Average regional rainfall is only 145mm, with some areas getting as little as 8mm, resulting in serious water shortages.

Much of China's desert area is located in Xinjiang, yet agriculture is still one of the pillars of the regional economy. Its high-quality cotton and fruit are famous nationwide. On the outskirts of Turpan , a farmer proudly shows off his grape fields, which are irrigated with an electric pump that floods the arid soil with water from deep underground.

Overall, Xinjiang produced 7.5 million tonnes of fruit last year and 2.9 million tonnes of cotton.

Xinjiang's oil and gas fields have failed to live up to expectations, but oil derricks dotting the plains around Turpan and deep within the Taklimakan Desert show that it is still a viable resource. A pipeline stretching 4,000km to Shanghai supplies natural gas to the metropolis.

The region produced 26 million tonnes of crude oil and 21 billion cubic metres of natural gas last year.

Tourism is a fast-growing sector of the economy as visitors seek out experiences on the exotic and historic Silk Road.

At the airport in the provincial capital, Urumqi , tour operators solicit business and hand out pamphlets advertising travel packages. Summer is traditionally the high season for tourism.

Omir, a tour guide in Tuyoq village outside Turpan, worries about the impact on tourism from protests in ethnic Tibetan areas and the security crackdown in Xinjiang before the Olympics.

'There will be fewer tourists this year,' he said.

The number of foreign tourists rose 21 per cent to 438,400 last year, while domestic visitors rose 28 per cent to 21 million.Government officials have tried to convince potential visitors that Xinjiang is still safe, after alleged terrorist incidents this year, including an attempt to blow up a plane as it was flying from Urumqi to Beijing.

Foreign investment remains relatively small in Xinjiang when compared with booming coastal provinces. Still, foreign direct investment rose 20 per cent last year to US$125 million.

Xinjiang shares a 5,400km border with eight countries, including Kazakhstan, Kyrgyzstan, Tajikistan, Afghanistan and Pakistan. At the main bazaar in Kashgar, traders sell metal goods from Pakistan and other imported goods.

The region was once a key part of the Silk Road, the trading route between China and the west.

Last year, Xinjiang's total foreign trade was valued at US$13.7 billion, or a mere 0.6 per cent of the nation's total of US$2.17 trillion.

Tian Changyan , head of the Xinjiang Institute of Ecology and Geography, said rapid economic development was having an unintended consequence: environmental problems such as desertification.

'The pursuit of maximum economic benefits, wealth, maximum convenience, linked with an increasingly complicated way of life, also accelerates destruction of the environment,' he said.